What Is A Bankruptcy Proceeding?
Bankruptcy is a legal proceeding in which a person who can not pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy proceeding cases are handled in federal court.
Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.
To put it bluntly, bankruptcy is a legal way to avoid paying people what you owe them. In many situations bankruptcy is the only way that you can keep your home from foreclosure, your car from repossession, your possessions from auction and creditors from making your life miserable.
When a person is discharged in bankruptcy, he or she is relieved from liability for most debts incurred before the bankruptcy was filed and protected from future collection of those debts. The purpose of bankruptcy is to give you a “fresh start.”
The Bankruptcy Code is divided into chapters. The chapters that usually apply to consumers are Chapter 7, where most or all of your debt is wiped out, and Chapter 13, which involves a repayment plan.
In most cases, once you file your case, the “Automatic Stay” immediately goes into effect. The Automatic Stay means that a bankruptcy filing automatically stops, or stays, and brings to a halt most lawsuits, repossessions, foreclosures, evictions, garnishments, attachments, utility shut offs, and debt collection harassment.
Creditors cannot take any further action against you or your property without permission from the Bankruptcy Court.
If you would like to find our more about how the bankruptcy proceeding works, you can start with our answers to common bankruptcy questions or if you prefer, watch our many videos in our bankruptcy library. If you need further assistance, or are planning on filing for bankruptcy, give us a call at (810) 653-3300 to schedule a FREE consult.